#WalshSaysToCautiouslyShrinkBalanceSheet Deep Dive: Kevin Warsh and Cautiously Shrinking the Fed Balance Sheet – Liquidity, Volume, Price, and Everything in Between
Kevin Warsh (Trump's nominee for Fed Chair, early 2026 context) advocates shrinking the Fed's massive balance sheet (~$6.6 trillion as of February 2026) aggressively but cautiously — restarting or accelerating Quantitative Tightening (QT) without triggering market shocks, repo crises, or violent yield spikes. He pairs this with support for rate cuts to aid growth, but the QT focus is seen as hawkish on liquidity.
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